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Dec. 6, 2016, 1:49 p.m. EST

Is the Trump Trade a chump trade?

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About Rob Isbitts

Rob Isbitts is the founder of Sungarden Investment Research, an investment management and equity research firm. Over the past three decades, Rob has managed daily liquid portfolios through diverse market conditions. He created several investment strategies, including the Sungarden Hedged Dividend portfolio, an alternative approach to the pursuit of income, preservation and long-term growth. Rob has managed mutual funds and authored two books. He can be followed on Twitter @robisbitts.

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Asset Allocation: Attack of the rising rates

Symbol Index Name 20 Day Price Returns (Daily) Year to Date Price Returns (Daily)
^STRA S&P Target Risk Aggressive Index 0.0% 4.1%
^STRC S&P Target Risk Growth Index -0.7% 3.5%
^STRB S&P Target Risk Moderate Index -1.4% 2.9%
^STRD S&P Target Risk Conservative Index -1.7% 2.5%

Source:Ycharts.com, data as of 11/25/16 close

I will have more to say on this in a future column, but for now, I will simply tell you that if you are a balanced investor and balance includes bonds (which it typically does), you had better start paying attention to the rumblings in the bond market. Rven if bonds find a near-term bottom soon, I suspect the larger trend has changed.

No, bond investors, this is not good for you

Symbol Index Name 20 Day Price Returns (Daily) Year to Date Price Returns (Daily)
^TYX CBOE Treasury Yield 30 Years Index 20.9% 0.3%

Source:Ycharts.com, data as of 11/25/16 close

The biggest move among the dozens of indexes I follow is this one, which is up more than 20% in 20 days. It's the yield (not price) of the 30-Year U.S. Treasury Bond, and it is one of several indicators that have introduced the real possibility that the 36-year bond bull market is ending. So while speculators are watching the stock market and its knee-jerk reactions to the Trump Administration's expected economic policies, I suggest you look beyond that to the massive debt burden that would accompany those policies. The bond market is already responding to this, but it is likely just round one of many rounds.

We all want economic prosperity, but it comes at a price. The spending part will happen, but the return on that investment cannot be evaluated for a while. So enjoy the Trump trade now, but make sure you don't end up feeling like a chump when the hype phase gives way to economic reality.

What's your risk number? My firm has made available to Marketwatch.com readers the Riskalyze risk tolerance quiz. It takes about two minutes to complete, and by doing so you can estimate your "investment comfort zone" for short-term market volatility. You can go here to take the quiz.

This material was compiled by Sungarden® Investment Research. Sungarden Investment Research provides advisory services through Dynamic Wealth Advisors. This material has been distributed for informational purposes only. Forecasts, estimates, and certain information contained herein are based upon proprietary research and should not be considered as investment advice or a recommendation of any particular security, strategy, or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Past performance is not a guarantee or a reliable indicator of future results. Investing in the markets is subject to certain risks including market, interest rate, issuer, credit, and inflation risk; investments may be worth more or less than the original cost when redeemed. There is no guarantee that these investment strategies will work under all market conditions or are suitable for all investors and each investor should evaluate their ability to invest long-term, especially during periods of downturn in the market. SungardenInvestment.com does not provide personal investment advice.

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